Premium Bonds - Not a bean for months now!!!!

Premium Bonds - Not a bean for months now!!!!

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Discussion

Maxf

8,269 posts

205 months

Tuesday 18th May 2010
quotequote all
Apparantly there are 40 billion premium bonds held - so each month you have a 20bn/1 chance of winning a million.

Compare that to 14m/1 chance of winning the lottery each week, and a big win on the PBs seems like a fairly long shot!

jon-

16,153 posts

180 months

Tuesday 18th May 2010
quotequote all
Maxf said:
Apparantly there are 40 billion premium bonds held - so each month you have a 20bn/1 chance of winning a million.

Compare that to 14m/1 chance of winning the lottery each week, and a big win on the PBs seems like a fairly long shot!
But it's a lot more cost effective to shorten those odds with premium bonds than it is with the lottery. At least you get your investment back at the end!

Maxf

8,269 posts

205 months

Tuesday 18th May 2010
quotequote all
jon- said:
Maxf said:
Apparantly there are 40 billion premium bonds held - so each month you have a 20bn/1 chance of winning a million.

Compare that to 14m/1 chance of winning the lottery each week, and a big win on the PBs seems like a fairly long shot!
But it's a lot more cost effective to shorten those odds with premium bonds than it is with the lottery. At least you get your investment back at the end!
Well very quick and dirty but if you have £30ks worth your odds shorten to 666,666:1 (is the devil involved?). If you play the lottery once a month with the interest you'd get on a £30k deposit in a 2.5% account (assuming you take 60% home after tax) you buy 38 tickets a month so your odds of winning are 368,421:1

I'd assume the average jackpot is more than £1m as well - even when split.

You still have your investment back with the maxf lotto plan as all you are risking is the interest on the capital - same as PBs.

Still longer odds than a 1 legged, blind horse winning the national either way - so a bit of a nonesense really!

bogie

15,122 posts

236 months

Tuesday 18th May 2010
quotequote all
well someones got to win..and does every month ...just like the lottery ......and you cant win it, if youre not in it, no matter what the odds are

I guess it depends on how big your investment pot is - if you have a couple of hundred grand in shares etc elsewhere,then £30K into bonds is just another gamble

...if you only have £20K total life savings and are trying to grow it, then premium bonds are not the best place to put it wink

Maxf

8,269 posts

205 months

Tuesday 18th May 2010
quotequote all
bogie said:
...if you only have £20K total life savings and are trying to grow it, then premium bonds are not the best place to put it wink
Agreed. Nobody should take advice from me anyway - I'm literally the anti-gekko - aka the worst investor in history.

Pat H

7,683 posts

220 months

Tuesday 18th May 2010
quotequote all
Maxf said:
I saw some calculations a while back, and for the money you were better off (substantially) putting your £30k into a savings account and then spending the interest on lottery tickets each week - the return was better and the chance of a big win was much improved over PBs.

It was something like 10 tickets a week, with a 14m/1 chance of winning weekly vs 30,000 tickets a month with several billion/1 chances of winning each month.
Interesting.

I always thought that PBs were the thinking man's lottery.

You had some marginal chance of winning a million, but that you could always cash in your chips.

I had £25k in PBs for about a year and my winnings just about kept up with what I could have earned in interest.

I am intrigued that you would be better off to stick the cash in a savings account and then blow the interest on lottery tickets.

For me, the main problem with the lottery is that I just can't be arsed to buy the tickets.

I am in a lottery syndicate at work for two reasons. Firstly because someone else does all the work. Secondly because I couldn't bear the prospect of being the sad loser who had to carry on working when the smug winners are all sailing off to Monte Carlo to spend their millions.

I no longer have any PBs. I cashed them in a few years ago and chucked the money into my offset mortgage.

drink

Maxf

8,269 posts

205 months

Tuesday 18th May 2010
quotequote all
Pat H said:
I am intrigued that you would be better off to stick the cash in a savings account and then blow the interest on lottery tickets.
It's only my mad ramblings and might be rubbish - I really was focussing on winning the big prize, rather than accumulating the smaller ones.

Don't invest in the maxf 'maddoff' lotto plan just yet! wink

Tiggsy

10,261 posts

216 months

Tuesday 18th May 2010
quotequote all
this notion that if you have a few hundread K then "why not" is daft....the reason "why not" is because the odds are SHOCKING. Its like saying if you have a few quid why not go down the casino each weekend, or have a flutter on the horses.....etc, etc.

Being worth a bit doesnt make you less able to understand odds! In fact, the reverse is true - which is why the lotto is played by poor people (and PB are the same.....i'll bet the typical PB holder is far from wealthy)

bogie

15,122 posts

236 months

Tuesday 18th May 2010
quotequote all
Tiggsy said:
this notion that if you have a few hundread K then "why not" is daft....the reason "why not" is because the odds are SHOCKING. Its like saying if you have a few quid why not go down the casino each weekend, or have a flutter on the horses.....etc, etc.

Being worth a bit doesnt make you less able to understand odds! In fact, the reverse is true - which is why the lotto is played by poor people (and PB are the same.....i'll bet the typical PB holder is far from wealthy)
I know quite a few business people worth millions who hold £30K in bonds ...maybe its force of habit...they dont bother checking the odds...dunno, never really questioned it myself before either

how is holding bonds like going to a casino? you cant lost your money? ...at worst its being eroded by inflation, just as it would be if you kept it in your pocket

I agree...the lotto is another tax on the poor ....a redistribution of money to some lucky people smile

Pat H

7,683 posts

220 months

Tuesday 18th May 2010
quotequote all
bogie said:
how is holding bonds like going to a casino? you cant lost your money? ...at worst its being eroded by inflation, just as it would be if you kept it in your pocket.
Of course its not like going to the casino.

But PBs really are a crap investment at the moment.

The returns are awful and, as inflation really gets hold of the economy, that erosion of your investment really is something to worry about.

There are plenty of more attractive places to stuff your cash.

Property?

Gold?

E-Type Jags?

In fact, just about anything other than cash in the bank, whether it is in a savings account or in PBs.

drink





nomisesor

981 posts

151 months

Wednesday 19th May 2010
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Sorry to bang on about inflation - RPI as of today, um, yesterday as it's 00.27hrs, = 5.3% so the current issues of NS&I 3 & 5 yr bonds at RPI+1%, tax-free, is equivalent to 10.53% for a higher rate taxpayer.

PBs do, as others have said, have the (tiny) potential for a disproportionate win. My wife & I have had about the expected return over the last few years, but my best was when a student in the 1980s; a £5 bond bought for me by my grandmother in 1966 won me £500, a nice sum for a student then - I used it to stag one of the privatisations - oldies will remember those - Amersham, Jaguar, etc.

Edited by nomisesor on Wednesday 19th May 00:33

Pat H

7,683 posts

220 months

Wednesday 19th May 2010
quotequote all
swerni said:
Pat H said:
Property?

Gold?

E-Type Jags?

In fact, just about anything other than cash in the bank, whether it is in a savings account or in PBs.

drink
Can you explain to a numpty why those three would make a good investment ?
Well, they are commodities, rather than currency.

As inflation takes hold of our fragile economy, the value of your cash is eroded and has less relative purchasing power as time goes on.

The price of the commodities, however, rides the crest of the inflationary wave.

Some commodities are also a decent investment.

Property is traditionally a good long term bet, though the short term might not be looking so bright.

Gold is always popular.

A mint E-Type is always a worthwhile place to stick your money. Check out what has happened to Lotus Elans and Ferrari Dinos over the last two or three years.

The only problem with buying an Elan, a Dino or an E-Type would be resisting the temptation to use it all the time.

And even if the value of your investment goes down instead of up, you can still live in it, look at it or drive it.

Why would anyone want cash in the bank at the moment?

drink


Tiggsy

10,261 posts

216 months

Wednesday 19th May 2010
quotequote all
bogie said:
Tiggsy said:
this notion that if you have a few hundread K then "why not" is daft....the reason "why not" is because the odds are SHOCKING. Its like saying if you have a few quid why not go down the casino each weekend, or have a flutter on the horses.....etc, etc.

Being worth a bit doesnt make you less able to understand odds! In fact, the reverse is true - which is why the lotto is played by poor people (and PB are the same.....i'll bet the typical PB holder is far from wealthy)
I know quite a few business people worth millions who hold £30K in bonds ...maybe its force of habit...they dont bother checking the odds...dunno, never really questioned it myself before either

how is holding bonds like going to a casino? you cant lost your money? ...at worst its being eroded by inflation, just as it would be if you kept it in your pocket

I agree...the lotto is another tax on the poor ....a redistribution of money to some lucky people smile
Is like going to the casino in the sense that its a daft thing to do with your money and is done because you are hoping for something that will NEVER happen (statistically).....i know, i know...its not EXACTLY the same - you dont need to wear smart trousers to hold PB, yada, yada biggrin

And i know loads of millionaires who hold PB until someone points out what a crap vehicle they are...then they sell them!

Pat H

7,683 posts

220 months

Wednesday 19th May 2010
quotequote all
swerni said:
All three scenarios you could lose big time.
All sounds a bit high risk for me, I'm going to keep mine in my sock draw smile
I agree that property and gold are not presently an attractive choice, and that £30K won't buy much of an E-Type.

But it would buy you a mint Elan Sprint.

A fire and theft policy only costs a few quid and it doesn't cost anything to rotate the tyres and turn over the motor every few weeks.

Stick it in the corner of your garage and watch it appreciate.

And if you don't have the garage space, then buy a Triumph X75 and put it in your living room.


derin100

5,169 posts

207 months

Wednesday 19th May 2010
quotequote all
Maxf said:
jon- said:
Maxf said:
Apparantly there are 40 billion premium bonds held - so each month you have a 20bn/1 chance of winning a million.

Compare that to 14m/1 chance of winning the lottery each week, and a big win on the PBs seems like a fairly long shot!
But it's a lot more cost effective to shorten those odds with premium bonds than it is with the lottery. At least you get your investment back at the end!
Well very quick and dirty but if you have £30ks worth your odds shorten to 666,666:1 (is the devil involved?). If you play the lottery once a month with the interest you'd get on a £30k deposit in a 2.5% account (assuming you take 60% home after tax) you buy 38 tickets a month so your odds of winning are 368,421:1

I'd assume the average jackpot is more than £1m as well - even when split.

You still have your investment back with the maxf lotto plan as all you are risking is the interest on the capital - same as PBs.

Still longer odds than a 1 legged, blind horse winning the national either way - so a bit of a nonesense really!
I too have become totally disenchanted with PBs. Through a combination of a lack of investment savvy, reticence about risk taking with my 'hard earned', too little time to think properly due to be too busy and simple inertia we as a five member family have ended up with our full quota of £150K in PBs...Yet we have seen very, very little return....especially since they dropped the prize fund.

Extrapolating the above rough calculations I estimate our chance of winning the top £1M pound prize in any given year to be 1 in 11111. Or, said another way...within any one period of 11,111 years the chances are we should win it once! Yipee!

I was looking very closely at a possible 'high-end' classic car as a serious alternative. Given that I already have a few cars my wife was less enamoured by the notion.

So (and I really don't know if it's the right thing at all but frankly I'm getting to beyond caring) we have today agreed the purchase of a house in France!

Now, please see my question on Euro vs Sterling exchange rate in the near future...advice very much appreciated.

Mr E Driver

8,542 posts

148 months

Monday 6th September 2010
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Anybody know has PB's improved or got worse as an investment?

nomisesor

981 posts

151 months

Monday 6th September 2010
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The current rate is 1.5% as it has been for a while, and the lowest prize is still £25.

mark387mw

2,138 posts

231 months

Monday 6th September 2010
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I've got around £15,000 in premium bonds and the last 6 months prizes have totalled £225 so 1.5% as stated. The prizes were the £25 a month so nothing exciting but you got to be in it to win it!
I have had the bonds a number of years and the best prize was £500 one month, will I get a big win? Probably not but where else should I put the money? I'm using it like a deposit account and would invest another £5,000 but is there better interest or potential high return with similar low risk?

Tiggsy

10,261 posts

216 months

Tuesday 7th September 2010
quotequote all
nomisesor said:
The current rate is 1.5% as it has been for a while, and the lowest prize is still £25.
and thats 1.5 across the 40billion held - so when someone scoops £1m it drops the rate for the others.

PB are a VERY cheap way of the government borrowing money from you....so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea

mark387mw

2,138 posts

231 months

Tuesday 7th September 2010
quotequote all
Tiggsy said:
so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea
I don't particularly like doing this so where do I invest?

Low interest rates and property on the slide, I may as well look for an investment vehicle if that exists - E Type Jaguar would be nice but a money pit I'd expect so defeats the object. Any ideas?